01 May 2012

Expatriate, You're Evicted!


I supported a couple of cases where the landlord, though receiving large rent payments from a family assigned to the U.S., fell on hard times and their rental properties went into foreclosure.  In both cases, we never learned the details behind why the landlords ended up in the predicament.

In fact, the landlords of these beautiful homes in the best of neighborhoods went 'radio silent' on us.  One international assignee, with three children enrolled in local public elementary schools, found out about the problem when the real estate agent that helped him find the rental property left him a cryptic message.

Another family also with children, received a letter in the mail from the bank stating that their rental home was in foreclosure.  Shortly thereafter, the home was then plagued with an ant infestation.  And if that wasn't enough, one of the worst winters experienced in the area in years damaged the home and so needed serious repair that we were certain that the unresponsive landlord would not take care of.

No calls were being returned.  Neither the landlords, the banks, nor the lawyers were sharing any information.

In the first case, the assignee had only six months left on his assignment, and only four of these months would the children need to be enrolled in school.  To prevent a dramatic visit from the town Sheriff, we could put the family in temporary housing, but there were no places for a family of five in the school district where the children were attending school.

We consulted with internal and external counsel but our options in both cases were quite limited.  With the first case, the advice was to continue paying the lease and hope that the bank would take no action until after the tenants had left.  Thankfully, and surely aided by pressure banks were receiving to slow the rate of foreclosure, the family stayed in the property to the end of the assignment.  But with possible threat of eviction hanging over their heads the whole time.

With the other case, the family had only been on assignment for almost one of three years of the assignment.  The host department ended up covering the repairs required on the home in order to keep it livable for the family until they left in December, locking the keys inside the empty home.  Since we were not receiving call backs from the landlord, we sent a certified letter to ensure they understood that the tenants were leaving the property and where the keys could be found.

Among the costly implications of the situation were:
  1. Low- to high-grade anxiety for assignee and family;
  2. Loss of productivity for the assignee now having to devote time to resolving;
  3. Loss of security deposits given to landlords;
  4. Additional expense to business of a mid-assignment move;
  5. Time spent by and on legal counsel;
  6. Repairs to home not covered by the landlord;
I still believe that the rental agreement, unless there's a tax advantage in doing otherwise, should be handled between the assignee and the landlord, despite the risk that it may bring.  Still, I'd like to ask you, what can be done to ensure that persons renting to assignees won't go into bankruptcy or foreclosure?

Surely the landlords doing background checks on prospective tenants are here to stay, but what about credit checks for landlords who'd like to rent to assignees?

In the end, I think the best thing we can do is to be sure that the assignee rental agreements to advise the incorporation a release of the lease agreement if the home is to go into foreclosure proceedings, in the same way that we recommend a diplomatic clause to leave a lease early.

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